Question

The consumer price index in the United States (base period 1982–1984) was 237.486 in 2015 and 242.821 in 2016. Calculate the inflation rate from 2015 to 2016.

Short answer

The US dollar has inflated from 2015 to 2016 by 2.09%.

Step-by-step solution

Calculations for the answer

The following formula gives the inflation rate in a year:

$Inflationrate\left(\mathrm{\pi }\right)=\frac{CPIintheGivenYear-CPIinthePreviousYear}{CPIinthePreviousYear}\times 100$

Thus, the inflation rate from 2015 to 2016 is:

$$\begin{gathered} \mathrm{\pi }=\frac{\left(242.821-237.846\right)}{237.846}\times 100 \\ =\frac{4.975}{237.846}\times 100 \\ =2.09\% \end{gathered}$$

Hence, the inflation rate is 2.09%.